New Jersey Protectionism

A long list of economists, business types, lawyers, and generally intelligent people who understand the free market have written a statement to New Jersey Governor Chris Christie against the New Jersey Motor Vehicle Commission's decision to prevent Tesla Motors (or anyone, really) from selling cars directly to consumers.

Forbes has an article that does a pretty good job summarizing New Jersey's ban  on the direct sales.  Basically, at least as I understand it, Tesla Motors needs a middleman to sell their car.  Yay free market!  Two other states, Arizona and Texas, also ban the direct sales.  For his part, Texas Governor Rick Perry has referred to the laws keeping Tesla out as "antiquated."  Arizona is also moving forward in stripping their law preventing direct sales.  Of course, when Tesla is looking to build a "gigafactory" somewhere in the southwest, creating thousands of jobs in the process, there tends to be a motivating factor.

The letter to Governor Christie includes some of my favorite folks, like Donald Boudreaux and John Cochrane.  Some highlights include:

Our starting point is some basic observations on the economics of retail distribution.  As a general matter, manufacturers face a decision about whether to distribute their goods through specialized retailers or directly to consumers.  The superiority of either option for a particular manufacturer depends on a variety of idiosyncratic factors, and neither consumers, nor manufacturers, nor the economy as a whole is necessarily made better off in the abstract by one system or the other.

Later:

We pass no judgment on whether Tesla's decision to bypass dealers and distribute directly is actually the best business decision for its particular circumstances.  in fact, the essence of our concern with the Motor Vehicle Commission's regulation is our certainty that neither we nor they are well positioned to make such a determination.  Rather, it is a decision that Tesla is best situated to make.  And ultimately it is consumers who should decide whether they are happy doing business with a company that bypasses dealers or whether they would prefer to buy automobiles from established dealer networks.  That is the way that markets are supposed to work.

So what it comes down to is why is this regulation in place?  Really, more important, why is it still in place.  Sometimes laws simply get outdated.  Whatever the original reason these laws were enacted, clearly they currently serve as nothing more than protectionist policies.  This means there are some people so frightened about competing in the free market that they have powerful friends write bills and vote into law policies that protect their interests against competitors.

Standing against protectionism is GOP 101.  Even if you aren't an actual conservative and stand more centrist on issues, clearly this should be a violation of your modicum of free market principles.  If Governor Christie has any thought of future presidential ambitions, he absolutely needs to see this law be stricken.  There is no way he would make it through the primaries if he allows this law to stand.  Hopefully Governor Christie, if only for selfish ambition, sees to it that Tesla, and any other business, can sell directly to its consumers.